Asked by Arshjot Singh on Sep 24, 2024
Verified
Three possibilities are equally likely and have payoffs of $3,$6,and $9.The expected value is:
A) $4
B) $5
C) $6
D) $7
Expected Value
A statistical measure that calculates the average outcome when the future includes scenarios that may or may not happen.
Payoffs
The outcomes or returns from a particular action, investment, or decision, often used in game theory and economics.
- Understand the concept of expected value and how to calculate it for simple scenarios.
Verified Answer
SN
Sariga Nandhu3 days ago
Final Answer :
C
Explanation :
The expected value is calculated by multiplying each outcome by its probability and then summing those products. With three equally likely outcomes ($3, $6, $9), each has a probability of 1/3. Thus, the expected value is (1/3)*$3 + (1/3)*$6 + (1/3)*$9 = $1 + $2 + $3 = $6.
Learning Objectives
- Understand the concept of expected value and how to calculate it for simple scenarios.